Question: "What should we do to teach our kids about money?"
My parents were very private about money. In fact, in discussing this with others I believe that was the norm for their generation. You just didn't talk to your kids about money matters at home. Now I can understand that. You don't want little Sally going to school the next day saying, "Guess what! My daddy just got a big cut in pay, and now he's only making $40,000 a year." Lovely. We all have nightmares about that one.
However, keeping our children in the dark about money issues is not the answer. Why is it important to teach children about money? Because they will spend the rest of their lives worrying about it. Knowledge, preparation and experience can eliminate many of the problems they could encounter down the road. It could save their marriage.Think about that. Money is the #1 cause of divorce, yet we spend very little time preparing our children to handle it.
Realize YOU Are the One Who Needs to Teach Them
This is a primary area where adult children struggle to be independent. Many have not been taught the basics and have little or no experience in how to handle money or jobs. Most of us would acknowledge that we didn't know nearly enough when we moved out. Unfortunately, we don't do much to equip our children any better.
We can go overboard in protecting our privacy by not discussing crucial principles that our children need to know and understand. Another big issue is that many of us also feel uncomfortable with our own understanding of financial issues, and try to avoid it as much as possible. However, the ostrich approach rarely works well, and it is absolutely devastating in raising independent children.
Before we begin teaching our children about financial things, however, it is important that we get a grip on where we are as parents on this issue.
Philosophy of Money in Family
It's a good idea to have a discussion with your spouse about your marriage's philosophy of finances. You may wonder if you even have one. Did you get married, then run from paycheck to paycheck and credit card to credit card? Are you savers or spenders? How do we FEEL about money? Does it scare you to death and you try to avoid the topic altogether hoping the Retirement Fairy comes and makes it all work out? How do you HANDLE money? These are all excellent things to discuss and understand.
You may wonder why this is important to do before teaching your children. Nothing will be quite as confusing as to be taught by a teacher who doesn't really understand the subject. Worse yet, to be taught by two teachers who disagree or are both clueless. Very unhelpful. If one spouse is going along pushing savings, savings, savings, and the other is sabotaging with messages of spend, spend, spend, you can see how the child will be extremely confused.
Plan for teaching kids about money - not ad hoc method
You can either put together a plan to teach your children about money, or you can plan on hoping they learn it somewhere else. Then, plan on bailing them out when they run into trouble. I am amazed at parents who never sit down for longer than 2 seconds to discuss this and wonder why their children rack up credit cards and bounce checks. It's OK. Today is a great day to start.
Teaching them the basics
To begin, think back to how YOU were taught about money. When did your parents begin? What went well? What didn't go well? What would you change?
I remember being in complete shock about the utility bill when I got my first. I don't know what I was thinking - perhaps I wasn't thinking. When it arrived, I was horrified. I remember my brother being instructed carefully on savings. On the other hand, I don't recall having a single conversation on how to save, and why? Or, for what things should I be saving? Brother ended up with a tidy nest egg. I ended up with spending habits that took 20 years to correct.
I remember Mom carefully teaching me how to shop and be frugal - she is an absolute master shopper. She can dicker at Sears (and has!). She taught me a wonderful skill. I'm sure you could think of many instances in your own life with your parents.
Here again, it is good to sit and jot down those things you want your children to learn and understand and perhaps some ways of going about it.
As parents, it's critical that we plan on teaching and training our children about how to handle money and finances. There are many resources available on the Internet. All it takes is parents who sit down, discuss, and plan. Then, you can begin.
Of all the things we teach our children, they will be most interested in this one. So, start today. A great place to start is, "Daughter, we would like to talk about money. What would you like to know?" She'll laugh and answer, "How much can I get and when?" Then, the discussion can begin.